Want a simple, pain free plan to increase your savings this year? CPA, author and blogger Mike Piper says save 1 percent more. “Increase your savings contributions by 1 percent of your gross income,” suggests Piper.
It might be difficult to imagine how such a small change could make any difference at all, but according to Piper this strategy can work wonders, especially if you are young. I could not agree more.
Anything you can do to become a consistent saver is going to come back to bless you in many ways in the future. A personal program of consistent savings does more than increase your bank account. It changes your attitude. It quiets your insatiable desires and moves you away from the edge where it is easy to worry and panic. Money in the bank changes everything.
We Americans are not very good savers. In fact, as a nation, we’re pretty pathetic. As of this writing the personal savings rate in the U.S. is right at 4.6 percent of disposable personal income. To add perspective, the average annual disposable income per person works out to just about $40,000 per year. A 1 percent increase would boost annual savings by just $400 from $1,840 per year to $2,240 annually.
I understand that saving money isn’t easy. That’s because the cost of everything seems to be rising and there are so many things our families need. It takes courage and creativity to stretch the money far enough to last until next payday. I get it. But I also know how easy it is to turn “wants” into “needs.” You know what I’m thinking about and that would be your cable TV bill and data plans for your smartphones. I’m talking about restaurant meals and fancy coffee drinks. Money has a way of leaking out of our lives. If you’re smart you’ll start to notice and do something to plug the leaks.
I don’t know what the future holds but I do know that we are going through particularly difficult economic times. Things are uncertain. That’s why we need to get our heads out of the sand and plan accordingly.
If you knew for certain that exactly six months from today you would lose your household income, that for a season you would have to survive on what you had saved, how would you prepare? You don’t know what is going to happen this year, so why not go ahead and begin to prepare as if it will be the worst case scenario. Then if all is well in six months, you’ll have started a nice nest egg. Get tough, be strong.
One percent. Just one piddly percent more than you are saving now. Don’t think about it. Just do it. Don’t flinch, don’t over think. Just designate a place to save it and then get ‘er done.
I’ll check back next time this year to see how this has worked out for you. I’m smiling because I already know. I can’t wait for you to find out.